Lynas shares leap as Rinehart ramps up $332 million stake

A cool young man walking in a laneway holding a takeaway coffee in one hand and his phone in the other reacts with surprise as he reads the latest news on his mobile phone

You know it’s about to get interesting when Gina Rinehart gets involved. Australia’s richest person has become a conductor within the resource dealmaking orchestra, so her large investment in Lynas Rare Earths Ltd (ASX: LYC) shares will surely draw a crowd.

News of Rinehart scooping up a substantial stake in Lynas is propelling shares 4.4% higher to $6.36 this morning. Meanwhile, the broader market is flat at 7,612 points in the moments after the morning bell.

Gina, the magnetic magnate?

Rinehart’s multiple billions were made in iron ore. Resurrecting her father’s struggling mineral exploration company, Hancock Prospecting, Gina has amassed a $37.4 billion fortune. In recent years, Gina Rinehart has expanded her interest in other commodities.

Listed companies under Rinehart’s repertoire already include Liontown Resources Ltd (ASX: LTR), Azure Minerals Ltd (ASX: AZS), Brazilian Rare Earths Ltd (ASX: BRE), and Arafura Rare Earths Ltd (ASX: ARU).

Whether intentionally or not, most investments are in ASX lithium shares and rare earth companies. Now, we can add Australia’s largest rare earths company to the list.

A notice released yesterday afternoon shows Gina Rinehart and Hancock Prospecting hold 5.82% of Lynas shares. Amassing a total of 54.4 million shares in the company worth $331.5 million.

As per the notice, purchases first began on 20 December 2023. Additional investments were made in December and January before pausing further orders until this month. However, Rinehart grabbed $49 million of shares in three trading days — 12 April, 15 April, and yesterday.

When tallied up, Gina’s investments in rare earths exceed half a billion dollars.

Why buy more Lynas shares now?

Rinehart might be seeing higher rare earth prices ahead.

Analysis by Wood Mackenzie indicates that the demand for rare earths, such as neodymium (Nd) and praseodymium (Pr), is pressuring supply. Specifically, the global data analytics firm believes demand will exceed supply in 2026, pushing rare earth prices higher as early as next year.

WoodMac cites the ongoing energy transition as the driver for growing demand.

Furthermore, Rinehart’s move follows the announcement of the proposed ‘Future Made in Australia Act’. Based on Prime Minister Anthony Albanese’s speech, some believe government funding could go towards local refinement of critical minerals, such as rare earths.

Lastly, the Lynas Rare Earths share price has fallen 15% in 2024, as shown above. Rinehart might have decided the company’s shares had retreated to an area that once again represented value.

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Motley Fool contributor Mitchell Lawler has positions in Lynas Rare Earths. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.